Correlation Between Grupo Aval and Chaoda Modern

Can any of the company-specific risk be diversified away by investing in both Grupo Aval and Chaoda Modern at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Grupo Aval and Chaoda Modern into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grupo Aval Acciones and Chaoda Modern Agriculture, you can compare the effects of market volatilities on Grupo Aval and Chaoda Modern and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Grupo Aval with a short position of Chaoda Modern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Aval and Chaoda Modern.

Diversification Opportunities for Grupo Aval and Chaoda Modern

-0.35

Correlation Coefficient

Grupo Aval  Chaoda Modern

Very good diversification

The 3 months correlation between Grupo and Chaoda is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aval Acciones and Chaoda Modern Agriculture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chaoda Modern Agriculture and Grupo Aval is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Grupo Aval Acciones are associated (or correlated) with Chaoda Modern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chaoda Modern Agriculture has no effect on the direction of Grupo Aval i.e., Grupo Aval and Chaoda Modern go up and down completely randomly.

Pair Corralation between Grupo Aval and Chaoda Modern

If you would invest  199.00  in Grupo Aval Acciones on October 16, 2024 and sell it today you would earn a total of  9.00  from holding Grupo Aval Acciones or generate 4.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Grupo Aval Acciones  vs.  Chaoda Modern Agriculture

Grupo Aval Acciones

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Aval Acciones are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Grupo Aval reported solid returns over the last few months and may actually be approaching a breakup point.

Chaoda Modern Agriculture

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chaoda Modern Agriculture are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Chaoda Modern reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Aval and Chaoda Modern

The main advantage of trading using opposite Grupo Aval and Chaoda Modern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Aval position performs unexpectedly, Chaoda Modern can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Chaoda Modern will offset losses from the drop in Chaoda Modern's long position.

The idea behind Grupo Aval Acciones and Chaoda Modern Agriculture pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.